The failure rate for marketing initiatives in small businesses is huge and it’s time to talk about why.
I want to illustrate this to you through a story.
This story involves a small business owner, a marketing agency, and a whole lot of frustration.
This story is for you if you're a small business owner who has thought:
- Why are so many marketers full of hot air?
- Why do marketing agencies charge an arm and a leg to do nothing?
- Where are the results from my marketing engagements? I never get a return.
- What the hell is wrong with the marketing profession?
Let's begin!
Meet Manuel.
Manuel runs a small professional service business.
And…..he is quite chuffed with himself! Starting off as a sole practitioner, he has grown his team to 10 talented individuals over the last 3 years.
His business is humming along nicely, and his staff are stable and ‘in the groove.’
As his employees need his input less and less, it was time for him to start working ‘on’ the business.
He wanted to focus his attention on generating more revenue and getting the business to operate closer to full capacity. Things are good, but ‘they could be great’ he thinks.
He decides it’s time to do some marketing and onboard more clients.
Manuel hasn’t worked in marketing before and the employees he has are not marketers so he has to look externally to get this work done.
He asks his friend Heather (another business owner) if she knew an agency that he should work with.
‘Sure’ said Heather. ‘I’ve just started working with “‘Marketing Agency X’”
‘They seem great and I’ve got a really good feeling about them. They are running some Facebook and Google ads for me as we speak.’
Manuel didn’t press Heather any further, he’s heard enough.
Manuel reaches out to Marketing Agency X and arranges a meeting with them.
It’s a new experience so he attends the meeting with a sense of hope, he begins to imagine all the growth he was about to get, maybe he’d need another couple of staff members very soon?
He loves the idea of having a system generating business for him all year round. Although his business has grown over the last 3 years, it would be better to have leads consistently coming in every month.
Currently growth is very sporadic; at times he will get an influx of referrals, at other times it will be dead silent. He finds himself wanting a little bit more control over when he receives leads.
He imagines how great it would be to have a tap that he can turn on when referrals are quiet, then when he gets flooded with leads he could turn it off again. This is the dream. This is what he wants.
His mind keeps running wild with possibilities and he finds himself smiling at the thought.
Meeting The Agency
He meets with Agency X and loves the discussion. They dress well, are friendly, and clearly they ‘get digital marketing’.
He learns new acronyms like CPC (Cost per Click), ROAS (Return on Ad Spend), and CPM (Cost per 1000 Impressions). It’s like another world. He’s amazed with this new lingo and it excites him.
After a second meeting he has heard enough to press ‘Go’ on some campaigns.
The price is a little higher than what he was expecting, but the agency explains that both labour and ad spend need to be covered, so he goes ahead and signs up for 6 months.
The Engagement Begins
Manuel thoroughly enjoys the first 2 weeks of the engagement. The agency is very responsive to his questions, and he even sees some of his ads floating around on Facebook. It’s a new feeling and it makes him smile. His business is getting more exposure. This is the start of something great.
The ads do seem a bit bland, BUT he enjoys seeing people making comments even if they aren’t always positive. It’s new. It’s exciting! His business is getting attention!
He doesn’t even mind that he gets no sales in the first month. Sure, there were some leads that came through, but most of them wouldn’t respond via email or phone, and the people he did speak to misunderstood what was being offered.
The marketing agency told him that it might take some time before they get the ‘funnel just right’ anyway.
Manuel isn’t deterred, it’s one month and once he gets this right his business is going to grow exponentially.
The 2nd Month
However, towards the end of the second month his enthusiasm is starting to wane.
The results in the second month are only marginally better than the first, and he still hasn’t converted any clients from the engagement.
He also notices that the agency is starting to become a little slower in getting back to him. He doesn’t feel the same warmth that he received when he first met them.
He decides not to judge this too early. He isn’t a short-term thinker and so long as it turns around soon, he will be happy.
That’s until…..
The 3rd Month
To Manuel’s dismay the results from the 3rd month end up being very similar again.
Now he is starting to get frustrated. 3 months into this engagement and no clients?? What is going on?
He begins to wonder whether or not that 2 hours at the beginning of the engagement was enough for the marketing agency to understand his business.
The ads they created weren’t inaccurate, but he couldn’t imagine they generated much excitement in the market either.
He starts thinking the agency is being lazy. This should be working by now!
He sends a stern email to the agency requesting an in-person meeting to discuss results (or the lack thereof).
The agency agrees to the meeting and Manuel is ready to put the pressure on.
The Meeting
Manuel attends the meeting and is welcomed with smiles, graphs, and learnings that have been made over the past 3 months.
They remind him that it takes time to perfect the funnel and proceed to rattle off some metrics indicating that even if he gets a handful of clients in the next month or two, he will get a positive ROI (Return on Investment).
Although not totally convinced, Manuel accepts they are only halfway through the engagement and if he gets some clients soon it will be worth it.
He wants more done though, so the agency says they can expand his advertising to the Google Display Network. He doesn’t really understand what that means but hopes it will start to bring in more business soon.
Manuel goes back to his office moderately happy and notices the agency improves their communication with him over the next week or 2 and sharpen up the ads they are running.
One of the ads actually makes him smile. It’s clever.
However, another ad he sees pop up makes a claim that his business can’t fulfil. How annoying!
Then he sees a couple more ads that while creative, don’t ‘feel right.’ These messages aren’t what he stands for and he is a little embarrassed they are ‘out in the wild’.
He emails the agency expressing his displeasure, so they take down the ads he isn’t happy with.
Enter Month 5
As of month 5 Manuel still hasn’t closed any sales. There were a couple of promising leads that he spoke to, but they still didn’t amount to anything.
He wonders why Heather referred this agency to him so he picks up the phone and calls her.
To his surprise, Heather tells him that she stopped working with them a month ago after her experience was similar to Manuel’s.
She says she has since learned from other small business owners that ‘marketing agencies are a rip off’ and that they ‘are all the same.’
‘Don’t bother with marketing’ is a common theme arising from this discussion.
Manuel is gobsmacked.
A referral that started with such promise has just been a hole in his pocket for about 5 months.
He would love to try and end the engagement now but since he has come this far, he is willing to give the last month a go. However, he isn’t hopeful of a favourable outcome.
6 Months Go By
Manuel runs a small professional service business.
Marketing Agency X sheepishly asks if Manuel would like to extend the engagement. They know he is unhappy and are just following the process at this point.
He confronts them and asks them how they think the engagement performed.
They speak to ‘brand awareness’, ‘market feedback’, and other terms that Manuel feels insulted hearing. He makes it clear he won’t be dealing with them again.
Marketing Agency X accepts his decision and the two parties go their separate ways.
Manuel takes a few months stewing over whether ‘marketing’ is just a scam as he continues to slowly build his client base through referrals.
3 months after the engagement he is going to have to bring on an extra employee to service new clients, but it sure as hell wasn’t because of any ‘marketing initiative’ or ‘marketer.’
What a joke of a profession, he thinks. How do these agencies even stay in business?
Does This Story Sound Familiar?
Many small business owners have been through the same experience as Manuel.
A flash in the pan engagement with a Marketing Agency (or a marketer) that really rubs them the wrong way.
They leave the situation bitter, frustrated, and with little faith that marketing initiatives ‘work’.
But What Does The Agency Have To Say About This?
Samantha started her marketing agency when she was 32. At this point in her career she had spent close to a decade working in internal marketing departments and other agencies. For the last couple of years she had felt the pull to go out on her own so she founded Marketing Agency X and got to work.
Throughout her first year in business, she felt a whole lot more empathy for her superiors that she had worked under previously.
Tight margins meant she had to keep a keen eye on what her staff were up to.
She didn’t like being controlling but couldn’t afford for members of the team to be doing ineffective work either.
There were many challenges.
In particular, she didn’t anticipate how hard it would be to turn away business.
Often she would have clients come through the door that were less than ideal, but she had bills to pay and would often still take them on.
Manuel was one of these people.
She met Manuel through another client of hers, Heather. Samantha decides to meet with him.
Samantha Invites Manuel Into The Office
Samantha arranges a meeting with Manuel and her staff members Toby and Sally. Toby is a Copywriter, and Sally an Account Manager.
Manuel is friendly enough, and there doesn’t seem to be any red flags with his personality. He has built a decent small business and just wants to grow it a bit more.
Samantha starts asking him questions like:
‘What makes your business unique?’
And
‘What services do you offer that your competitors don’t?’
Manuel’s answers are underwhelming to say the least.
He claims that ‘his service is better’ and that his staff ‘care’ about their clients.
Samantha presses him further: Couldn’t your competitors make the same claims Manuel? Is this what really differentiates you?
Manuel: Their service isn’t as good. I know that most of them have a high turnover, and that is really disruptive to their clients. Our staff are stable.
Samantha: Has any client actually told you they are with you because of your low staff turnover though?
Manuel: No, not exactly. But it’s obvious. Otherwise why would my clients stay so long? Some of them have been with me for the whole 3 years.
Samantha grits her teeth. She comes across this situation commonly. A business owner turns up to her wanting ‘marketing’ but without any differentiators for her to actually promote.
She knows these situations usually don’t work out but occasionally you get lucky.
She changes tact and asks Manuel whether he has a style guide or any other brand assets.
His blank stare says it all.
Manuel: I’ve got a logo. And a website. Is that what you mean?
Samantha: No, not really. Brand assets such as a style guide or a tone of voice help us to support your brand position in all the communication we do for you. Your audience needs a consistent experience with your brand to trust it and understand what you stand for.
Manuel: This is a bit fluffy for me. I don’t have that stuff and have grown my business just fine without it. I was just hoping you could run some ads for me and get me some more leads.
Samantha sighs under her breath and agrees to run some ads for Manuel. After all, what the client wants the client gets, yeah?
Toby, Sally, and Samantha, put on a brave face. Manuel is excited by the end of the meeting and they don’t want to ruin the mood.
But as soon as he leaves the room, the atmosphere changes.
Toby: Are we seriously taking him on as a client? I don’t even know where to start. He gave us nothing to work with!
Samantha: Yes we are. We’ve taken on people like him before and made it work. Remember Peter from Company.co?
Sally: That was a fluke. We ran some ads, the right people happened to see it and attribute it to us, we got lucky. Most of the time it doesn’t work out like that. Not to mention Peter had significant Brand Equity built up in the market for us to capitalise on.
Samantha: We’re entitled to sell him what he wants. He wants ads, let's run ads for him.
Sally: I know how this is going to end.
Toby: Me too.
Samantha: Come on! I know this situation isn’t ideal, but we don’t know it won’t work. We aren’t doing anything wrong. He is buying ads, let’s make him some ads.
Sally and Toby slink off to try and generate something from nothing.
They scrape together a campaign which doesn’t excite either of them, but they’ve done their best.
They would love to spend more time on the campaign, but they have other clients to also work with, and Samantha restricts ideation time as it costs the business too much.
The Campaign Goes Live
Sally pushes the first campaign live.
She reaches out to Manuel to let him know everything is going ahead, and to watch out for his ads on Facebook. She can hear the excitement in his voice. If only she had his optimism, she thinks.
Over the next few weeks, Manuel emails Sally quite a bit. He has all these ‘ideas’ that are so half baked she struggles to be polite while listening to them. She always lets him speak but says that the idea might be more useful later on in the engagement. She reminds Manuel that they have to see how the current campaign performs before making too many changes.
This is a tedious part of Sally’s job. An ‘idea’ from a client may amount to hours upon hours of work and effort. Most of her small business clients don’t understand this. Earlier in her career she would implement most of these ideas, but she soon learned that’s a one-way ticket to burnout. And when the ‘idea’ ends up being ineffective, the client turns around and says ‘You didn’t do it right’.
She doesn’t implement random ideas anymore but that doesn’t stop them flooding in.
The tidal wave of ideas is usually most prominent at the start of an engagement. That's generally due to the high contact time as Sally spends more effort on a client early on. There is a lot to set up.
However, when months 2 and 3 roll around the agency business model requires her to spend less time on Manuel as she onboards other clients and puts in that upfront time with them.
She suspects this is why towards the end of month 3 she gets……
The Dreaded *Email
One day Sally sees the* email from Manuel in her inbox. He isn’t happy. He wants a meeting and spends 80% of the email venting his frustration at having closed no clients to date.
Sally knows they haven’t gotten Manuel any sales yet. She’s not surprised. She sees this a lot.
The team invites him back into the office and Sally begrudgingly puts a report together that shows the campaign in the best light possible.
Manuel is very agitated but Samantha reminds him they are only halfway through the engagement and that they can try some new ideas. Toby sits there in silence.
Manuel leaves after they agree to also put his ads on the Google Display Network. Deep down Samantha knows that isn’t going to help but she had to give him something.
Manuel leaves the room and the energy becomes tense (again).
Samantha: So we haven’t gotten him any leads at all yet?
Sally: We have but they are all duds. It’s either that or he can’t convert.
Toby: I’ve written some pretty boring copy in my time, but this probably takes the cake. I’m essentially telling the wider community that they should work with him because he exists. What a compelling reason that is!
Samantha: Do you think we can improve this?
Sally: Let me see. We don’t know his market, we don’t know his industry, his brand awareness is next to non-existent, and he can’t give us a reason why anybody should work with him specifically……..what do you think?
Samantha: Alright. Well let’s try and come up with something a bit more creative. Have some more ideation time on this one. I know it’s difficult but see what you can do.
Sally and Toby put their heads down. They understand that Samantha has a business to run and bills to pay but they also need something to work with.
Nevertheless, they come up with some new creative to put out into the market.
While they had some more ideation time on this occasion, it was still a drop in the ocean compared to what they needed EVEN if they were briefed well.
Sally Pushes The New Messaging Out Into The Market
Sally actually smiles at what the team have come up with for Manuel. It’s creative and entertaining. But she also knows that doesn’t guarantee commercial success.
Manuel also liked what they created but seems to change his mind when the campaign is live. Sally sent the creative to him for approval but it seems he didn’t look closely enough before he said ‘yes’.
He requests some of the ads get taken down and cc’s Samantha in on the email.
After receiving this, Samantha walks over to Sally and Toby.
Samantha: What happened? What did we put out there?
Sally: Well we got a bit creative and apparently Manuel doesn’t like it. We can take the posts he doesn’t like down.
Samantha: Ok. Let’s try and avoid this type of thing happening in future.
Sally can’t bite her tongue any longer.
Sally: Well, what are we supposed to do? We are supposed to come up with this amazing campaign in a handful of hours, he wants something new but can’t tell us what, and then when we whip something up out of thin air…..would you look at that, he approves it, THEN turns around and says he is unhappy when it is live. This is ridiculous!
Sally (sarcastically): Lucky we have his brand positioning documents, his style guide, and his tone of voice, to refer to so we make sure the creative doesn’t ‘feel wrong’.......oh wait, we don’t have any of those either. My mind reading skills seem to have slipped lately.
Samantha knows Sally is right. It’s a common conundrum. Clients don’t have the diagnostic and strategic marketing expertise to correctly brief, her agency doesn’t have the expertise or business model to do that work for clients, and even if they did, the clients won’t pay for it; so round and round the merry-go-round they go.
Sally takes down what Manuel doesn’t like and also makes a point to increase her contact with him. At this point the engagement is on life support. She doesn’t think anything will change but is still giving it her all.
She ends up working longer hours over the coming weeks as she manages other clients as well as Manuel.
But after 6 months nothing has changed. Manuel makes it clear he doesn’t want to work with them anymore and moves on.
What Went Wrong?
There are countless examples playing out like this around the country month after month, year after year.
In this article I am going to break down ‘What went wrong?’
I think the answer is long and complex but can be summarised under 7 macro problems.
Those 7 macro problems are:
- There isn’t a shared understanding of what marketing is in small business.
- The lack of respect marketing has in the small business community means truly effective work doesn’t get done.
- Marketing is not currently an evidence based/scientific profession.
- Marketing Strategy and Market Research is vital but not valued.
- The marketing agency business model clashes with small business budgets.
- Communications/Advertising is treated like a silo.
- ‘Communication/Advertising Agencies’ brand themselves as ‘Marketing Agencies’ which inherently misleads and over promises.
Let’s discuss them all in detail.
From the top.
1) There Isn’t A Shared Understanding Of What Marketing Is In Small Business
What is a small business? And what is marketing?
In Australia, the ABS defines a small business as one with a head count between 0-19 employees, medium businesses are those with a headcount between 20-199 employees, and large companies are those with 200+ headcounts.
In Queensland most businesses are small businesses (452,989, 97.4%), followed by medium businesses (11,270, 2.5%), then large businesses (727, 0.1%)
(Check out the data for Queensland here.)
New South Wales follows a similar % breakdown for small businesses (1,159,719; 98.7%), medium businesses (13,939; 1.2%), and large businesses (1,619; 0.1%) .
(Check out the research for NSW here.)
What’s curious about NSW’s data is that the median employee headcount for medium sized businesses is 33.
In other words, there are a significant amount of medium businesses that are only a bit bigger than small businesses.
We can assume that those particular medium businesses who don't have internal marketing expertise still suffer from similar issues to people like Manuel.
Now we have defined Small Business, what is ‘Marketing’?
‘Marketing’ is a word that has been beaten and abused so much that it seems to have lost its meaning.
Do you want 72 different definitions of marketing? You probably don’t. But you’re going to get them anyway. Here is what Heidi Cohen has put together for you: https://heidicohen.com/marketing-definition/
Let’s look at 3 definitions from Heidi’s article below:
The Chief Content Officer of MarketingProfs says that;
‘Marketing is anything you create or share that tells your story.’
So…..according to this definition, Marketing Agency X did their job. They created and shared messages to tell Manuel’s business’s story.
However, was that Manuel’s concept of what Marketing is? Was that what he wanted? It wouldn’t seem so. He explicitly said he wanted leads after all.
What about Gini Dietrich, CEO of Arment Dietrich Inc.?
'Marketing is branding, naming, pricing, and the bridge between paid and earned media. It is NOT sales.'
In this example it is specifically defined as something that isn’t SALES!
As Manuel was expecting sales and new clients (or at least decent leads) from the marketing initiative, his definition of what marketing is might fit closer to Joey Iazzetto’s (President, UniCom Marketing Group):
'Marketing is defined as ‘we help people sell more stuff.’
So Who Is Right?
I will share my favourite definition soon; but first I want to impart the principle that a shared definition is a great start. As you can see from the above definitions, it seems everyone has a different idea.
If we agree on what it is, we’ve got a chance at success. Expectations will be aligned, everyone will know the role they are playing, and everyone will understand where the ‘gaps’ are so they can be planned for accordingly.
In the case of Marketing Agency X and Manuel, they didn’t have a shared understanding of what marketing is. There was a large gap in marketing diagnostics and strategy the agency knew was unfilled, but Manuel thought he had given them all they needed to bring in (quality) leads. We all know how that story ended.
But if they had a shared understanding, they would have at least been operating from the same starting point and moving towards a mutually understood end point. In Manuel’s case he would have understood that there was a diagnostic and strategic gap so it could have been planned for, and ideally closed.
So what does this diagnostic and strategic gap look like?
I’ve never seen the 10-step marketing process explained better than by Professor Mark Ritson, Brand Consultant, and Marketing Lecturer.
Here is a simple high-level view:
Diagnosis
-
1) Market Orientation
-
2) Market Research
-
3) Segmentation
Strategy
-
4) Targeting
-
5) Positioning
-
6) Objectives
Tactics
-
7) Product
-
8) Pricing
-
9) Communications
-
10) Distribution
Now we have defined Small Business, what is ‘Marketing’
The diagnostic and strategic ‘gap’ is the first 6 steps. No wonder why things always go so badly when non-marketers (and plenty of marketers) think of marketing as step 9 (Communications).
Focusing solely on Communications takes no account of;
- Whether you are priced well for profitability.
- Whether your product marketing is tight.
- Whether you have your positioning bolted down or not.
- Whether you are targeting the right segment(s).
- Whether the market is appropriately segmented to accurately target and position for.
- If the market research is robust and comprehensive (or there has been any at all).
I have seen plenty of small business owners find the above inconvenient. They’d prefer marketing to be what they think it is. But reality doesn’t care. I’d prefer to have a six pack while only going to the gym twice a year, but unfortunately, I don’t get to make the rules.
At best, communications/advertising is a waste of time without a strong strategy and diagnosis, and destructive at worst. There’s no hope of success. Well…..next to no hope. Sometimes you get lucky.
And while a profession being misunderstood is not unique to marketing (Eg. Ask a management accountant about tax and try to leave the conversation without a black eye), I do believe that marketing is significantly more misunderstood than most.
We all kind of know what a lawyer, accountant, and doctor do. We are closer to a shared understanding of what those words mean.
Marketing's different, and that's why it’s often expected that miracles are going to be performed by Marketers.
“But hang on a second”, I hear you say, “In Manuel’s case, shouldn’t the agency be setting better expectations?”
In a word: Yes.
BUT it’s a little more complicated than that.
The fact is that agencies can only sell what the market is willing to buy. Trying to change this is expensive and/or completely unaffordable.
Trying to change market behaviour has even killed companies before. Shoes of Prey Founder Michael Fox will tell you that. He has spoken publicly about how trying to change market behaviour contributed to the failure of his business: “An alternate learning I will take away is to pick a business that doesn’t require changing consumer behaviour.”
Changing behaviour and understanding is HARD. And the more that has to be educated (and there is a lot), the longer it takes and the bigger the investment the owner needs to make (which they don’t want to make).
So, when a small business owner comes in wanting “marketing done” (ie. communications/advertising), an agency is within their rights to sell that to them. I wouldn't do it myself, but if the provider has done their best to set expectations, I have no moral issue with this service being sold.
And if they don’t sell it? The Manuels of the world just go to a competitor anyway. The initiative still fails, just with another agency.
Agencies often won’t promise sales, and usually owners don’t specifically ask how many sales are expected, so is it really the agency's fault when the undefined sales expectations aren't met?
Small business is really tough, but the reality is that a lot falls on the owner to make initiatives a success, including those in the marketing function.
‘Market intelligence is shown to be crucial in the development of small business marketing capabilities and in the implementation of more formalised marketing strategies that allow small businesses to create value for customers and improve their performance. However, the level to which market intelligence is utilised and marketing capabilities are developed is found to be considerably influenced by the small business owner-manager and firm learning.’
Alright, on to the next point.
Oh wait, I promised you my favourite marketing definition.
Try this on for size:
“Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.” (Kotangon, Pangemanan, Pandowo, 2018).
Alright, now we are really moving on. As mentioned, marketers are expected to perform miracles, yet.....
2) The Lack Of Respect Marketing Has In The Small Business Community Means The Truly Effective Work Doesn’t Get Done
It’s an interesting phenomenon you witness when small business owners assign themselves marketing expertise (even when they have none).
I’ve heard many marketers (some with up to 25 years' experience) sigh and say to me ‘What the client wants, the client gets’ after executing a silly directive from a small business owner.
Would the client be saying the same thing to a lawyer with 25 years of experience? What about their accountant?
So why is marketing different?
I have a few theories.
First, I think that the lack of 'status' assigned to marketing doesn't necessarily attract the best minds at a young age.
Society thinks much more of lawyers and accountants, so smart younger people get drawn into that, as a result the marketing profession doesn't absorb the same cumulative cognitive ability.
There are many great marketers, but on average I suspect the IQ of marketing professionals would be lower than that of lawyers.
Second, there is a perceived low barrier to entry to the profession.
Anytime there is something that has a perceived low barrier to entry, it seems to get devalued.
Think about the amount of people happy to criticise singers. So many people don’t know the first thing about singing but are happy to assign themselves judge, jury, and executioner. Marketing is the same. Everyone has an opinion on it.
I’m sure you see the difference between this and other professions with high barriers to entry such as doctors, lawyers, pharmacists etc.
You aren’t legally prevented from working in marketing without a formal education (like you are in other professions), and with the rise of social media every Joe Blow has started calling themselves a marketer. They’re not marketers, they are just Instagram Posterers; BUT it hurts the perception of marketing.
These people take on freelance clients, get employment, or create agencies; then clients/employers get burned as the efforts from these so-called marketers fall short of expectations, the resentment towards ‘marketers’ grows, people listen to marketers less, so when they do engage marketers, they don't give them the scope to do what's necessary because they don't respect them, and the vicious cycle keeps getting more and more vicious.
Often marketers aren't truly respected, so they can't do what needs to be done.
You heard from Manuel himself:
“Come on! Just run some ads and make us some sales!! I don’t want to listen to all this diagnosis shit.”
But success takes what it takes. Again, I don't make the rules.
There's so much more to nurturing a prospect through a buying process than posting on Facebook and Instagram, especially in the B2B space, and this is the perfect opportunity for a good marketer to help a small business owner do what it takes to make this happen.
"There aren’t that many business clients that will say ‘You know what, I’m comfortable signing a contract with a company that I’ve hardly ever heard of before.’"
Professor John Dawes, Ehrenberg-Bass Institute
But if you think it's only small business who disrespects marketing? Think again.
Go to your favourite job site right now and do a search for ‘Chief Marketing Officer’, then do a search for ‘Chief Financial Officer’ .
What did you find?
What’s that? There are plenty of CFO roles and very few CMO roles? Hmmmmm, it’s almost like the market doesn’t think marketing belongs in the C Suite. It’s that or CFO's are leaving their jobs at radically higher rates than CMO’s; what do you think is most likely?
Perhaps you've heard the hilarious joke bigger companies make when they refer to marketing departments as 'The Colouring In Department' (Quick shoutout to the marketing companies who have owned this title; Colouring in Department. This one hurts my soul more than my cheeks because this perception really exists.
Marketing is much more than that and NEEDS to be much more than that. Comms, creative, and advertising are important, but they are small pieces of a much larger pie.
Marketing is much more than that and NEEDS to be much more than that. Comms, creative, and advertising are important, but they are small pieces of a much larger pie.
Manuel’s case is the perfect metaphor of what happens frequently….
Owner decides to pay an agency to run ads.
The agency asks him about his strategy and diagnostics only for it to be dismissed. He doesn't truly respect them and tells them that their questions are 'fluffy.'
Because they don't have his respect, they can't get him to agree to do the groundwork required to make an initiative effective.
Marketing needs respect to be effective and for the difficult, important work to be green lit. It needs to be understood from all parties what outcomes everyone is striving for are, and how that is going to happen. Skipping steps because they are inconvenient is the bane of this profession's existence.
Speaking of being understood by all parties......
The best way for marketing to communicate with other functions of the business, owners, and the market is with less; less slides, less lengthy documents, less messages, less segments targeted, less positioning statements, less, less, less. Marketing effectiveness is in the precision.
But what does that do for the optics?
A 10-slide presentation with few words on it can make an owner think they aren’t getting value for money. It doesn’t look like much work, does it? It doesn't necessarily garner respect.
This brings up quite the conundrum.
The longer that docs/presentations are, the less likely they are to be read/understood, but the more likely they are to *look* like they've taken a lot of work, but the less likely it is to be effective.
On the other hand, the shorter the doc/presentation, the more likely it is to be understood BUT the less likely it is to be respected because it doesn’t look* robust (even when it is), even though it's more likely to be effective.
So, what do you do? Pump out large docs you know won’t be read but will give you credibility; OR summarise things tightly and precisely BUT have the audience ask, “Is that all?”
If a great marketer created the presentation, then the shorter the better, they knew exactly what to include and they spared you the 90% of things they considered but opted to leave out. You should want precision and not a word more.
If it's a less competent marketer presenting, then that 'may be all.' After all, for the most part.......
3) Marketing Is Not Currently An Evidence-Based Profession
“You don’t hear architects arguing over the laws of physics”
This was a quote I heard from Byron Sharp, President of Ehrenberg Bass, on a podcast recently.
What a precise statement.
There are too many marketers ignoring empirical evidence and performing ineffective work as a result.
It's ok for a marketer to interpret research and understand what applies to a specific situation and what doesn't…..BUT as a profession we completely IGNORE the research (or don't know it exists). That's unacceptable.
Personal experience will never cut it on its own. You’d need 10 lifetimes of trial and error before you came to the same conclusions that can be found in robust scientific papers today.
How long would it take an individual to understand how much more profitable brand distinctiveness is vs brand differentiation?
How would a small business know that 95% of their buyers aren’t in the market at the moment?
‘But I read my Google Analytics reports’ I hear you scream. And that is great; or at least, it’s better than nothing.
But that is just one behavioural based report amongst a myriad of factors that you need to understand about your market. Behavioural based metrics tell some of the story, but aren't enough on their own.
If you disagree, explain to me how your Google Analytics showed similar results two months in a row, yet your business outcomes were wildly different?
When dealing with a group of people (target market) and their psychology/emotions there are an overwhelming number of variables at play. More variables than personal experience is going to be able to account for. We are trying to understand other carbon-based lifeforms and get them to do what we want for god's sake! Whose idea was it for this NOT to be scientific?
Marketing can’t get away with ignoring science.
Science has given us so much. It helps us to understand the world around us, make better decisions, and lead better lives.
Marketers (should) deal more with the intangible than the tangible. That means scientific support is needed to distill the intangible into measurable, actionable information.
Marketing needs to be treated like a science.
That means understanding the scientific method and being able to interpret scientific papers and data. It's paramount to our success.
And if too many marketers don't take the profession seriously, is it any surprise that.......
4) Marketing Strategy And Market Research Is Vital But Not Valued
If the word ‘marketing’ has been beaten to death, then ‘strategy’ is barely breathing.
Some people think of strategy as an excuse for someone to do little work and bark orders.
Others just don’t see the value in something that’s not ‘tangible’ and out in the wild.
Perhaps they are right, perhaps strategy isn’t that important?
Let's ask Elizabeth Warren what she thinks.
Enter the 2020 American Democratic Election.
Don’t get me wrong, I’d rather chew glass than talk politics, but this is a high-profile case of someone getting their positioning wrong.
She admitted as such in the following clip. Watch from 3:27 - 4:13
(Video set to play from 3 mins 25 secs)
Was her strategic political positioning the only factor in missing the nomination? Probably not, as she goes into other reasons for why she thinks she missed out.
But her ineffective positioning clearly worked against her.
Notice how she didn’t say ‘My Facebook Ads didn’t get enough engagement’ or ‘My SEO was no good’. It was a strategic issue, not a tactical one.
Most small businesses don’t have a strategy, and even if they do, it’s rarely informed by a robust diagnosis. This is why they keep marching faster down the wrong road.
Strategy matters and ignoring it doesn’t make it not matter.
Ask Elizabeth; she had a brand, money, and a world of political experience, only to get her positioning wrong.
Strategy is the process of working out the 95% of things you shouldn’t do. Pay particular attention to the word in bold in the previous sentence. There are no shortcuts.
Manuel and Marketing Agency X did next to no strategic work and got the result they deserved.
But it’s not just strategy that isn't valued, market research isn't valued either.
Ideally a small business continuously does its own market research (continuously collects feedback, continuously stays in touch with the market, continuously does secondary research) HOWEVER this is very difficult without internal marketing expertise.
I’ve never seen someone with an operational or financial background execute this well.
Manuel thinks he knows his customers, and he does…..through a certain lens. He knows them, but not in a way that is useful to improving growth outcomes.
You may ‘know’ someone, but there are many shades to people and the way a small business owner ‘knows’ their customers may not be insightful to informing marketing Initiatives.
Do owners know their customers? Usually.
Do they know them in a way that is deeply insightful to a strong marketer or marketing initiatives? Usually not.
What’s the outcome of this? In the absence of quality market research, marketers overestimate (by necessity) the insight a small business owner will have about their market/customers.
You can’t overcome this through research because a small business owner won’t pay for it, so you have to take their word for it and make the best with what you’re given.
So vast diagnostic and strategic assumptions are made like in Marketing Agency X's case, and would you look at the outcome……everyone ended up unhappy.
But having said that.....
5) The Agency Business Model Does Clash With Small Business Budgets
There is a minimum threshold that an agency needs to charge when it engages a small business. It's classic economies of scale.
As you saw in Manuel's case, the agency assigned him an account manager and copywriter (There would probably be a designer working on his account too).
These 3 staff members represent fixed costs that the agency has to cover.
Let's assume that Manuel was spending $4,000 a month.
| Total Monthly Budget | Labour Cost | Money left over for Advertising spend |
| $4,000 | $2,000 | $2,000 |
Manuel's Budget Breakdown
50% of his budget was going to labour.
It's different for big businesses.
As staff are a fixed cost, a bigger business with a $12,000 per month budget may only need to spend a little bit more on labour than Manuel did. Let's assume labour comes out at $3,000 for them.
| Total Monthly Budget | Labour Cost | Money left over for Advertising spend |
| $12,000 | $3,000 | $9,000 |
So in this case a bigger business automatically gets a much larger (75%) portion of their budget allocated to advertising compared to Manuel (50%) with a larger principle ($12k vs $4k).
But this only scratches the surface. Due to the fact that the bigger business has internal marketing resources, this acts as an effectiveness multiplier.
The agency can do great work because they are briefed well and are given more money for ad spend. A skilled internal marketer might say to an agency, ‘We are having issues with moving prospects from consideration to preference in x segment, with y buying process. We’d like you to help us bridge the first two steps in the buying process. We don't have the specific expertise in house to do it.’
To a non-marketer, I am sure this will sound like another language. But to the skilled ear, it is surgically precise and drastically improves the likelihood of success.
On the other hand, Manuel, briefed poorly, doesn't have the resources to allow the agency to 'bridge the gap', and due to the economies of scale has less money as a % of his fee going towards the actual advertising spend.
The agency can’t justify the labour with Manuel's budget to understand his business deeply (or hire diagnostic or strategic expertise) so 'the gap' persists.
And if Manuel won't pay to fill the gap, and the agency doesn't have the business model to fill the gap, where do we end up? We end up in Manuel's situation. Which means......
6) Communications/Advertising Is Treated Like A Silo
Wouldn’t it be great if you could run some ads and it didn’t matter what else you did in your business? The ads just ‘work’ and bring in lots and lots of leads (and money). Has Manuel re-entered the chat?
Well, I have some bad news. Everything your business does (and is) affects your advertising outcomes, and many aspects of the business that people think ‘aren’t marketing’ actually are.
- I’ve worked with people who wanted to run a campaign but were consistently taking 3 weeks to respond to referrals. (Some basic product marketing can help here).
- I’ve seen people continuously chase new clients even though their churn is huge. (Some exit interviews and some advocacy measurements can help here).
- I’ve seen (so many) people say their market is ‘everyone’. (Some research and targeting work can help here).
- I’ve seen businesses over capacity want to run more campaigns. (Firing some unprofitable clients and raising prices usually helps here).
- I’ve seen owners expect tiny acquisition costs and not want to hear that getting new business often costs real money (Some science on acquisition costs and secondary research can help here).
- I’ve seen agencies come through the door, retarget to the *nth. degree (ie. use the small businesses existing brand equity), make a few sales, then have it all fall apart two months later (after the brand equity has been used up). (A deeper understanding of brand equity and the buying process can help here).
- I’ve seen people who want to run campaigns who don’t even know the gross profit on their products, let alone understand when you should look at %GP vs $GP. (Some pricing work and modelling is useful here)
When assessing the buying process and growth potential, it doesn’t happen in a silo because customers don’t experience your business in a silo.
Your existing brand equity matters, your existing processes matter, your sales ability matters, your operation matters, your point of difference matters, the existing team members you have matter, your business model matters, your delusion matters, your lack of respect for marketing matters, your product/service matters, your existing value propositions matter, your culture matters, your previous marketing decisions matter, your budget matters, your business acumen matters, your desire to silo communications/advertising matters.
Acquiring a client is rarely a 2-step process you can push someone through whenever it suits you. The customer goes on the journey they are willing to go on to do business with you. Our job as marketers is to understand that journey, reverse engineer it, understand ALL the factors that influence that process, and then help the customer through that process.
“Marketing is not only much broader than selling, it is not a specialised activity at all. It encompasses the entire business. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view.”
- Peter Drucker
Don’t be like Manuel and try to silo communications/advertising.
But to blame it solely on the Manuel's of the world isn't telling the whole story either. After all.......
7) ‘Communication And Advertising Agencies’ Brand Themselves As ‘Marketing Agencies’ Which Inherently Misleads And Over Promises
Q: What do we call Market Research Agencies?
A: Market Research Agencies.
Fair enough. That's what they are.
Q: What do we call Communications/Advertising Agencies?
A: Marketing Agencies.
Oh-oh.
When we call Comms and Advertising Agencies ‘Marketing Agencies’ it implies that these organisations do ‘all the marketing’. They don’t (and can’t).
Ironically this is destructive positioning for the industry, and contributes to setting unrealistic expectations that result in small business owners getting burned time and time again.
Manuel wanted ‘marketing’ so to him an agency looks like a 1 stop shop. Theoretically he doesn’t have to deal with anyone else. On the surface it sounds completely logical. But by this point in the article I am sure you can see why this doesn’t work. Who is doing the diagnostics competently? Who is doing the strategic work competently?
So let's call these agencies what they are; Communications and/or Advertising and/or Creative Agencies.
This reminds us all that there is more marketing work that needs to be done outside of what an agency can provide. Much more.
It’s not that ‘agencies suck.’ I have friends who work in agencies, I refer work to agencies, there are many talented and capable people filling those organisations (but of course plenty poisoning the well too).
But they should be used as great tacticians, not the be all and end all to your marketing woes.
Be realistic about the diagnostic and strategic input they can provide you with.
In Summary
There are many problems with marketing in small businesses. These problems go deep.
This article was written to shed some light on these problems, start some conversations, and hopefully provide some business owners with a few lightbulb moments.
Let's start taking some steps in the right direction.
My message to Agencies:
- You’ve got to specialise. You have to have a target market. You have to build your business so it precisely fits the needs of the market you have chosen to serve. You have to practice what you preach. Having 'everyone' as your target market isn't good enough, and you know it.
- Own what you’re great at, but that's not diagnostics or strategy.
- Say 'No' to unsuited prospects. Like you will (hopefully) tell the small business clientele you have to do.
To Marketers:
- It’s time to become more evidence based. Not to mention pushing your own biases on a client’s audience is deeply irresponsible.
- We’ve got to start being honest about what we can achieve. We can’t understand a business deeply enough in a “25-minute strategy call" to do much for them at all. Seriously???? You have to dig for the gold. You'll barely scratch the surface in 25 minutes. Stop with this bite sized crap.
- We need to respect our profession before others will. Our word needs to become our bond. More precision, less pie in the sky claims, more science, more rigour, less 'trial and error'. No other profession has a failure rate like ours, and it doesn't have to be like this.
To Small Business Owners:
- Define what marketing is to you. Think about this when you interact with the profession and get on the same page from the get-go.
- Don’t tell yourself you are good at marketing. You’re not.
- You’re right. Plenty of marketers are crap.
- You’re going to need diagnostic and strategic marketing expertise assisting your business. I can’t see a way around this. So invest properly in real diagnostics and strategy rather than spending 3 times as much on failed campaigns. I know it’s hard. I know it feels like you aren’t getting anything, but you are, and the alternative is much, much more costly; as you already know.
- If you do decide to engage an agency, make sure they speak to your business needs and the outcomes you are chasing. When you talk to them you need to feel deeply understood. You need to clearly understand the role they will play in helping meet your business outcomes BUT you also need to understand the limitations they have and where their role ends.
- Don’t make the mistake of treating marketing as your own personal entertainment. It’s a serious profession and most of the work is actually ‘boring’ (but still awesome IMO).
- Diagnosis > Prescription. Always! Deeply understand what's wrong first. Stay disciplined and in the diagnosis phase until you are satisfied you can precisely articulate the problem(s) you need fixed.
And now I want to end on a positive note. Small Business is tough work, there are so many factors that owners are up against. It's hard! And it’s hard to trust marketers, and marketing agencies. Everyone’s been burned.
But it’s also hard for the competent among us to bridge this gap without your respect. But I'm not asking for this for free. Respect is earned. Be diligent, ask the hard questions, push until you are satisfied, wait for that true feeling of alignment; but once you have it THEN it's time to listen.
But most importantly; don’t give up. Effective marketing exists! You'll be grateful for it when you experience it.
